Solutions.
What is the purpose of the balance sheet? correct answers Report the financial position of the
business
What is the purpose of the income statement? correct answers Report business performance
What is the purpose of cash flows? correct answers Monitor incoming and outgoing money
What is the key takeaway of the balance sheet? correct answers Can the business meet current
financial obligation?
What is the key takeaways of the income statement? correct answers How can the business
improve performance?
What are the key takeaways of the statement of cash flows? correct answers Where is my money
generated and spent during a time period?
What are the components of the balance sheet? correct answers Assets, liabilities, and equity
What are the components of the income statement? correct answers Revenues and expenses
What are the components of the statement of cash flows? correct answers Cash in, cash out.
Why should we track assets? correct answers Info from recorded sales, inventory, assets, and
depreciation show a business's financial performance, resources, and obligations.
Current Assets correct answers Assets that can be converted into cash quickly (within a year)
Fixed Assets (long-term assets) correct answers Long term assets are acquired for the long-term
benefit of the business. They extend beyond a year.
What are types of current assets? correct answers Cash (or cash equivalents), AR, Inventory,
Prepaid expenses, Investments (marketable securities), Notes receivable
Notes Receivable correct answers Money that is owed to a business, so it is considered an asset.
What are types of fixed assets? correct answers PP&E and intangible assets
What are intangible assets? correct answers Copyrights, Patents, IP, Goodwill
What are the steps to tracking assets? correct answers 1. Identify the asset type
2. Check if there's an existing account in the chart of accounts.
3. If needed, add the account
4. Record the asset in the journal